BACKGROUND: Capitation rates for the State Children's Health Insurance Program (SCHIP) funded under Title XXI of the Social Security Act were based on assumptions about the health care needs of children enrolled in this program. It has been suggested that parents are selective in enrolling children who are, in their opinion, most likely to need care, and that families who do not view their children as needing such care are more likely to ignore opportunities to seek or to maintain enrollment in SCHIP insurance. Thus, there have been concerns that enrollees might have more health conditions than a general population of children. OBJECTIVE: The purpose of this study was to test the hypothesis that children in Title XXI have more ongoing health conditions than expected by comparing health status data from enrollees in 1 state SCHIP program to a nationally representative sample of children in the United States. METHODS: This study used statewide data obtained in a survey of Florida SCHIP program enrollees and national data obtained on a subset of the children who were assessed in the 1994 National Health Interview Survey (NHIS). We examined health and demographic data collected by means of a structured telephone survey from parents for a random sample of 2432 children 2 to 18 years old who participated in the Florida Healthy Kids Program during the time period of October 1, 1997 through September 30, 1998. We compared these data to information on a national sample of all 26 845 children in the same age range whose health was assessed by the 1994 NHIS, and to a subset of the 6460 children in the NHIS sample whose family income met the eligibility criteria for SCHIP. To do this, we eliminated those children who were receiving Medicaid and those children whose household income levels were known to be above the eligibility level for SCHIP. We also excluded children whose household income was not reported. Thus, effectively this subsample contained non-Medicaid children, whose family incomes were below 185% of the federal poverty level. In Florida, a parent interview conducted by telephone included the Questionnaire for Identifying Children With Chronic Conditions (QuICCC), and their responses were used to determine if the child had any chronic health conditions. The QuICCC is a validated questionnaire containing 39-item sequences that ask about consequences of health conditions in children. It not only provides an overall classification of whether the child has a chronic condition, but also yields information about the consequences affecting the child within 3 condition-related domains: 1) functional limitations; 2) dependency on compensatory mechanisms or assistance; and 3) service need or use above and beyond routine care for age. The 1994 NHIS Core Interview and Disability Supplement contained a series of questions about children's functioning and service use that simulated the QuICCC, and we applied a previously published algorithm for determining the presence of a chronic condition using these items. Both data sets included comparable information on parental ratings of children's health status (excellent, very good, good, fair, poor), and on school absences, bed days, and restricted activity days in the previous 2 weeks. RESULTS: Children in the Florida SCHIP program were more than twice as likely to have chronic health conditions than similarly aged children in the general population or children in the income restricted national subsample (31% vs 15.9% and 14.6%, respectively) and there also were more SCHIP children with school absences (29% vs 18% and 16.7%, respectively). In contrast, the rating of overall health of SCHIP children was not poorer according to their parents, and they did not have more activity restrictions. Children in Florida SCHIP who had conditions were more likely to experience related consequences within each of 3 domains, and they were nearly 3 times as likely to have all 3 types of consequences (7% in Florida SCHIP sample vs 2.8% and 1.7% in the full national sample and in the income-matched subsamome-matched subsample). However, the Florida SCHIP enrollees differed from the age and income-matched national sample in terms of the proportion of Hispanics. Thus, to verify these findings, we weighted the SCHIP sample to match the racial and ethnic proportions found in the national sample and repeated the analyses. The findings were robust, and there was no change in the percentage of children with special health care needs after such weighting. CONCLUSIONS: Overall, the results of these analyses support the notion of adverse selection and retention in the SCHIP program. This is unlikely to be the result of aggressive marketing in enrollment sites that serve children with more medical problems, as Florida health care providers rank third as a source of information about the Title XXI program after family and friends and the schools. In addition, Florida has active outreach and single-page application process for Medicaid and an aggressive program to move children to Title V, which also should minimize the numbers of children with special health care needs enrolled in SCHIP. Nevertheless, these findings suggest that the children being enrolled in Florida's SCHIP program are not the largely healthy population that was envisioned. If replicated in other SCHIP programs, these findings raise questions about the basic underlying assumptions concerning the health of potential enrollees and could have implications for the long-term fiscal viability of the program.